Neco Model Questions Vol1 2019 Economics Question 50
Practice objective / multiple choice question 50 from the 2019 Neco Model Questions Vol1 Economics examination.
A road project requires an initial construction outlay of \(\text{₦}500\) million at time 0. It will generate annual benefits of reduced travel cost equal to \(\text{₦}120\) million in year 1, growing at 3 % per year thereafter. Annual maintenance costs start at \(\text{₦}20\) million in year 1 and also grow at 3 % per year. Using a discount rate of 8 % per year and assuming an infinite horizon, calculate the net present value (NPV) of the project (in million naira). Should the project be undertaken?
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About This Question
This is Neco Model Questions Vol1 2019 Economics Question 50. It is one of the objective questions from the 2019 Neco Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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